Shares of Valeant Pharmaceuticals fell nearly 10.4 percent on Thursday after The Wall Street Journal reported the pharmaceutical company is under federal investigation for allegations it defrauded insurers by hiding its ties to Philidor, a mail-order pharmacy unit.

The Journal report, which cited people familiar with the matter, said the investigation is looking into whether Philidor, which is now defunct, falsely described its relationship with Valeant and it could be the most serious charge Valeant faces to date.

Valeant released a statement Wednesday saying it had previously disclosed in October 2015 an ongoing investigation and it said it is cooperating, and will continues to cooperate, with the U.S. Attorney's Office for the Southern District of New York.

"We do not comment on rumors about investigations," Valeant said in the statement, "and cannot comment on or speculate about the possible course of any ongoing investigation."

David Maris, a senior analyst at Wells Fargo Securities, said the investigation by state attorney generals, the IRS, SEC and others hold "significant risk factors" for Valeant's stock. Thursday he reiterated his "underperform" rating on the stock.

"We believe Valeant shares currently carry too much risk for us to be comfortable recommending them as an investment," he said in the report. "Our concerns stem from a number of factors, including opaqueness related to accounting issues, what we see as balance sheet risks, unanswered questions related to business practices, and confusion over how the Walgreens deal actually benefits Valeant."